AI Hedge Awards 2017

Acquisition International - Hedge Fund Awards 2017 45 Stats Investment Management Best Hedge Fund Boutique - Japan & Best Specialist Japanese Equity Fund (Since Inception): Ginga Service Sector Fund Stats Investment Management First established in April 2005, Stats Investment Management Co., Ltd. (Stats) is a hedge fund manager based in Japan specialising in managing Japanese Equity Long/Short strategies. COO Masahiko Iwai tell us more about the firm and its award winning flagship product. Company: Stats Investment Management Co., Ltd. Name: Masahiko Iwai Email: [email protected] Web: www.stats.co.jp Address: COI Hirakawa-Cho Bldg. 7F, 1-7-20 Hirakawa-Cho, Chiyoda-Ku, Tokyo 102-0093 Japan Phone: +81 3 6658 4361 HF170015 Stats’ flagship investment product is the Ginga Service Sector (“GSS”) Fund, which is a Cayman unit trust established in June 2006. The strategy itself largely concentrates on the IT and Service sectors as sources of alpha. In addition, it also focuses on medium and small size stocks, which are not widely covered by analysts so that original research by Stats can generate alpha unexploited by the market. The firm’s investment philosophy is based on the conviction that companies that are not widely covered by analysts provide greater opportunities for generating alpha through proprietary research and that liquid markets provide opportunities to exploit inefficiencies in stock pricing. Therefore, concentrating on sectors and companies with experience and knowledge is essential in understanding the businesses and products of your invested companies. These sectors are among the few areas that have the dynamism to dynamically change its business and pursue growth opportunities. As such corporate research is the backbone of Stats’ investment decisions, as Masahiko is keen to highlight. “The fund managers’company visits are extensive and rigorous; each fund manager visits 400 companies per year, and as a team the total will be more than 1000 companies. Since many information technology companies that Stats invests in operate in Tokyo, our office location provides us with an advantage. “In order to make our long short strategy successful, we believe that the skills to manage risk both at individual stock level and at portfolio level is extremely important. For this purpose, we limit our individual stock exposure to maximum 5% (under normal circumstances 3%). We also employ a paring strategy to avoid excessive tilts in sectors or investment themes. For this purpose, we adopt a proprietary sector allocation to capture the true natures of the businesses of our invested companies.” Stats’ investment management is supported by members with long experience and deep insights. CIO Toru Hashizume is one of Stat’s founding members. He started his career as a sell side analyst with one of the major research institute in Japan and specialized in the IT and Service sectors for more than eight years. After this starting career, he moved to one of the largest mutual fund companies in Japan and managed its flagship long only Japanese equity fund with 3-billion-dollar asset for more than seven years. He joined Stats in 2006 and started the long short strategy with innovatively new risk management. Working with the CIO is the fund manager Yhu Kuni, who has worked with Toru more than 10 years since inception of the GSS Fund. Masahiko outlines how this experience has culminated in the success the fund currently enjoys. “Fundamentally, the combination of our solid investment philosophy and experienced staff has produced extremely good performance over the past 10 years. With no single negative year, GSS Fund’s flagship Yen share class has recorded an annualized return of 13.86% with an annualized risk of 8.66%, during the period of June 2006 to Oct 2016. This return itself, along with the longevity of our track record, makes Stats stand out above competition. This achievement was highly recognized by various awards in 2016. Currently Stats manages near $250 million in assets under the GSS strategy, and its client base is spread across various regions and various investor types globally.” Based on the data from the firm’s Prime Broker, Japanese Equity Long Short strategies managed by Asian managers returned -2.81% on average, while our GSS Fund returned +3.44% year to date end October. This is yet more proof that the GSS strategy’s risk is well managed and has the capability to overcome even the most difficult market environments. Looking ahead, Masahiko expects the market conditions will start improving after the U.S. election, but since market liquidity is slow to recover, the fund will maintain a cautious approach to the market, by concentrating on the best stocks and managing our portfolio risk diligently. “Stats has recently introduced a new trading system to improve its operational efficiency. This effort is another part of Stats’ efforts to improve its service quality to meet the needs of both existing and potential clients of Stats. Heading towards 2017 and beyond, we will also continue to make its efforts to expand its business base by employing various external resources to support our marketing efforts.”

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